Changes to The European Patent System

Following a year in which the number of European patent applications filed increased to a record 258,000 (an increase of over 5% on 2011 despite difficult economic conditions), a single European patent that is enforceable in all EU states via a single court procedure is set to become a reality as early as 2014.

The European Unitary Patent (UP) System was approved in December 2012, after many years of debate and discussion. The Unitary Patent Court (UPC) is expected to be open for signature on 18 February 2013. It is envisaged that the UP Regulations will apply from 1 January 2014 or from the date of the entry into force of the Court Agreement if ratification by the contracting member states is delayed.

Unitary Patents

Once a European patent is granted it will be possible to request that the patent be treated as a Unitary patent, covering all European states signatory to the Unitary system. The patent will then be enforced/revoked via a single court procedure with a court decision taking effect in all states.

Implications

Transitional Period - There is a transitional period between the current European system and the new Unitary system, of at least seven years, with possible extension for a further period. During the transitional period, owners of existing European patents can opt out of the new Unified Patent System. This might be advantageous in certain circumstances. For example opting out could be useful in preventing the European Patent being revoked across all EU states via a single court decision under the UP system. At the same time, if existing European patent owners become aware of infringement in the EU, opting in to the UP system might be useful, so as only to organise and pay for a single infringement action covering all EU countries. Thought will need to be given as to whether to opt in or out during the transitional period.

Cost Savings - The UP system is being touted on the basis of providing a significant cost saving over the current system. However, this does assume that existing European patents are validated in a large number of European states. This is not always the case. It remains to be seen whether the new system will be cheaper. The official fees for the Unitary Patent have yet to be set.

Translation - The need for a granted European patent to be validated and translated into the local language of each country required is to be removed. However, if the patent is granted in German or French, it will still need to be translated into English. Patents granted in English will need to be translated into another language at least during the transitional period, although this need not be French or German. So for English language patents, some translation requirement will remain initially.

Renewal Fees - Renewal fees to keep the Unitary patent in force will be payable annually to the European Patent Office. This should represent a saving on the cost of paying renewal fees separately to each national patent office in which the patent is validated, and generally reduce the administrative burden. However, importantly, the cost of the single central renewal fee has not yet been decided but is expected to be relatively high and so will only be cost effective if protection in a threshold number of countries is required.

Court Strategy - The EU Member states are still to decide on the establishment of local/regional divisions of the Unified Patents Court, to supplement the Central court in Paris, Munich and London. There are also complicated rules on where different court procedures may be held. Bringing an infringement action on a European patent will therefore become the subject of some detailed tactical considerations, at least during the initial stages of the new system.

There is also considerable uncertainty as to how the system will operate, whether the stated cost and time savings will result in practice, and whether the court system will actually increase uncertainty. The new system appears to provide a great many potential options which may lead to forum shopping and/or bifurcation of the infringement and revocation parts of a patent case i.e. the hearing of these parts in separate courts as per the current German system.

Overall Views

Whilst not perfect, the single unitary European patent grant system should result in a simpler and probably cheaper grant system offering protection for inventions across a marketplace of around 500 million people. However, whether and to what extent this applies will depend on the amount of the official fees and the countries in which protection is actually required. It is possible that the Unitary patent will only be of real value to large multinationals/corporations that require wide protection across Europe. However, the implications of being able to sue for infringement before a single court will most likely outweigh such considerations, assuming there is some prospect of litigation, but this must be weighed against the ability for such a patent to be centrally revoked. In view of these considerations, it is vital that strategies are tailored to particular circumstances.